Railtrack shareholders have vowed to continue their fight for compensation over the collapse of the former rail company - despite a serious setback.

The Railtrack Private Shareholders Action Group (RPSAG) had raised over £2 million to bring its case to court.

But this week a High Court judge ruled the group needs another £900,000 to press its case against the government.

The group of 50,000 shareholders said it is angry with the payout agreed in 2001 and is seeking "fair value".

Public power

The group outlined a claim against the government for "misfeasance" - abuse of public power - when the then transport secretary Stephen Byers put the rail infrastructure firm into administration.

Railtrack shares, which had been as high as £17, were suspended at 280p when the administration order was made.

Shareholders received £2.50 a share following the decision but private investors wanted more.

As a result a High Court civil action was brought forward against the government.

The latest decision, which resulted in a High Court judge agreeing with government lawyers that shareholders should pay £2.25 million to cover the state's cost if the case is lost, means the RPSAG will now have to ask shareholders for extra funding.

Fair value

The action group's spokesperson Geoff Weir said: "We were extremely disappointed at this week's High Court decision, but it has taken three years to bring this case close to trial and we're not going to give up now.

"When we launched the campaign we told the Railtrack private shareholders that we would only ask for money once. However, circumstances have changed and we have taken heed of the comments made this week in court by Mr Justice Lindsay.

"Nevertheless we are determined to continue our fight for fair value and so this marks the launch in the next stage of our campaign to get Mr Byers and his colleagues responsible for the administration of Railtrack into court."

The case is effectively against Mr Byers and his decision, but it will be defended by the Department for Transport.